Understand the title process so you choose the right title company and possibly save some money
February 20, 2019
When you are in the market for a home, you will need a title company. Most people do not know what a title company is or does. Below is a general list of everything a title company does.
- Perform a title search in the Land Records of the county where the property is located
- Underwrites the title search to determine insurability
- Facilitates the receipt of all payoffs from mortgage companies, tax assessor, homeowner’s association, judgments, liens, etc.
- Obtains releases for any items on title that were previously paid
- Coordinates with all parties
- Prepares and organizes all documents for settlement
- Conducts the settlement
- Records the new Deed and/or the Deed of Trust in the Land Records
- Receives, balances and disburses all monies in connection with the transaction
- Prepares the Title Insurance Policies for the Buyer(s)
- Sends the original recorded Deed and Title Insurance Policies to the Buyer(s)
- Assures everything that was paid through the transaction file releases in the Land Records
In Virginia, Maryland and the District of Columbia, the Buyer(s) have the right, by law, to choose the title company. Many Buyers rely on their Realtor to recommend one. It is very common for Realtors to recommend vendors repeatedly so generally speaking, you can trust that your Realtor’s recommendation will be a good one. We suggest asking your Realtor for two or three title company recommendations so you can do your own research and make sure you choose a title company that is a good fit for you. Below are a few things you should look for and do when researching a title company:
- Go to their website and see if it is up to date and helpful
- Call the office. Do they answer promptly and are they respectful and happy you called?
- Check reviews on Yelp, Facebook and Google
- Ask each of them to email you an estimate of their fees in the form of a Closing Disclosure
This is the part where we teach you to compare fees properly and hopefully save you a little money. When you receive your Closing Disclosure Estimates, you’ll want to review and compare the fees. That is all that matters when shopping for a title company as that is all the title company has control over. The names of the fees are not universal and vary greatly, as do the amounts. To avoid confusion, go to Page 2, Section C. You will see fees associated with title services. Add up everything in that section (it should equal Line D). Next, go to the bottom of Page 2 to Section H. Look for “Title – Owner’s Policy to _______________”. Add that amount to the total from Section C. This is the total of your title fees. Many make the mistake of comparing the Settlement Fee at one company #1 to the Settlement Fee of company #2 and fail to look at the other lines. For example, Pruitt Title charges an all inclusive Settlement Fee of $799 + title insurance, which is based on the sales price and loan amount. The $799 includes ALL 12 functions listed above. Most other title companies charge several fees that add up to well more than $799. But, if their Settlement Fee is listed as $300, they Buyer chooses them to handle the closing. A few weeks ago, a Realtor called me for an estimate on behalf of her client. I sent it and called her the next day to follow up. She said her client chose another title company because their Settlement Fee was $599. I went to their website and added up all their fees and the total was $1,125.00 NOT including title insurance.